May 2010 — GAO´s Comments on Third Round of Recipient Reporting

What GAO Found

Recipients Are Gaining More Experience Reporting, but Full Time Equivalent (FTE) Data Quality Continues to Be a Major Concern

According to Recovery.gov, as of April 30, 2010, recipients reported on over 179,000 awards indicating that the Recovery Act funded approximately 683,000 jobs during the quarter ending March 31, 2010. As reported by the Recovery Accountability and Transparency Board, the job calculations are based on the number of hours worked in a quarter and funded under the Recovery Act and expressed in full-time equivalents (FTEs)[1]. Under the continuous corrections period that the Board implemented in the last reporting round, recipients will be able to modify their third round submissions during the period that began on May 3, 2010, and runs through June 14, 2010. The final update of the third round of recipient reported data is planned for June 16, 2010.

Under the Recovery Act, recipients are to file reports for any quarter in which they receive Recovery Act funds directly from the federal government and are required to submit reports no later than 10 days after the end of each calendar quarter. The Board extended the reporting deadline by several days for all three rounds of reporting. The reports are to be made public 30 days after the end of the quarter; the reports have been made public by this deadline. Reporting requirements apply to nonfederal recipients of funding, including entities such as state and local governments, educational institutions, nonprofits, and other private organizations. In addition, these requirements apply to recipients who receive funding through the Recovery Act's discretionary appropriations, not recipients receiving funds through entitlement programs, such as Medicaid, or tax provisions. Certain other exceptions apply, such as for individuals. In addition, the required reports cover only direct jobs created or retained as a result of Recovery Act funding; they do not include the employment impact on materials suppliers (indirect jobs) or on the local community (induced jobs).

Recipient reporting under the Recovery Act represents a step forward in federal spending transparency. However, the exercise is also highlighting problems in obtaining quality recipient reported data due to the overall complexity of funded programs and the nationwide scope. The recipient reporting process is going more smoothly than in the first two rounds as recipients have become familiar with the reporting system and requirements. OMB and the Board's responsiveness to feedback, reflected in updated guidance and system enhancements, has also helped improve recipient reported data quality and reliability. The FTE calculations, however, continue to result in noncomparable data across Recovery Act funded programs and pose problems for some recipients as evidenced through our field work in selected jurisdictions covering education and public housing programs.

To ensure that FTEs are properly accounted for over time, we recommend that the Secretary of the Department of Education clarify how Local Education Agencies (LEA) and Institutions of Higher Education (IHE) should report FTEs when additional Recovery Act funds are received in a school year and are reallocated to cover costs incurred in previous quarters, particularly when the definite term methodology is used.

To ensure that subrecipients do not underreport vendor FTEs directly paid with Recovery Act funds, we recommend that the Secretary of the Department of Education re–emphasize the responsibility of subrecipients to include hours worked by vendors in their quarterly FTE calculations to the maximum extent practicable.

To improve consistency in how FTEs generated using the definite term are calculated, we recommend that the Secretary of the Department of Education and the Director of OMB clarify whether IHE and LEA officials using this methodology should include the cost of benefits in their calculations.

To ensure housing agencies use the correct jobs calculation, we recommend that the Secretary of Housing and Urban Development clearly emphasize to housing agencies that they discontinue use of the outdated jobs calculator provided by HUD in the first round of recipient reporting.

To help clarify the recipient reporting responsibilities of housing agencies and to improve the consistency and completeness of jobs data reported by housing agencies, we recommend that the Secretary of Housing and Urban Development issue guidance that explains when FTEs attributable to subcontractors should be reported by the prime recipient.